2015: solid performance with Group net sales of €7,722m and EBITDA up 4% to €1,075m

Proposed dividend stable at €1.65 per ordinary share

Key figures and indicators (continuing operations)

in € million

Q4 2015

Q4 2014

% change

Volume

Price/mix

FX

Other

Sales

1,926

1,811

6%

3%

-2%

4%

1%

Nutrition

1,264

1,124

12%

7%

0%

3%

2%

Performance Materials

601

618

-3%

-1%

-7%

5%

EBITDA

261

254

3%

Nutrition

206

200

3%

Performance Materials

90

80

13%

ROCE (%)1

7.6%

8.2%

1) Based on full year

CEO statement

Feike Sijbesma, CEO/Chairman of the DSM Managing Board, commented: “DSM’s fourth quarter performance, slightly ahead of expectations, was encouraging. We are particularly pleased with our progress in Nutrition, where both Animal and Human Nutrition delivered strong organic growth. Performance Materials continued to benefit from improved margins. In addition, our focus on cash flow and working capital efficiency contributed to a strong operating cash flow of €313 million.

This good progress in Q4 completes a year in which we achieved solid results. We delivered strong organic growth in Nutrition despite lower vitamin E prices. Cost savings and good margin management helped drive higher margins in Performance Materials, which also benefited from lower input costs. Currencies, while being a mixed bag, had a favorable effect overall despite the strengthening of the Swiss franc.

We expect to make further progress with our growth initiatives in 2016 both in Nutrition and Performance Materials although the macro-economic context remains challenging. These will be underpinned by our group-wide cost and productivity improvement programs as well as our disciplined focus on capital allocation and working capital. We are on track with these initiatives which will help drive improved profitability and return on capital that we target with our Strategy 2018.”

Outlook 2016

DSM aims to deliver increased full-year EBITDA and ROCE in line with the targets set out in its Strategy 2018: Driving Profitable Growth.

Key figures & indicators

in € million

Q4 2015

Q4 2014

% change

Volume

Price/mix

FX

Other

Sales - Continuing Operations

1,926

1,811

6%

3%

-2%

4%

1%

Nutrition

1,264

1,124

12%

7%

0%

3%

2%

Performance Materials

601

618

-3%

-1%

-7%

5%

Innovation Center

40

42

-5%

-15%

1%

9%

Corporate Activities

21

27

Discontinued Operations

0

563

in € million

FY 2015

FY 2014

% change

Volume

Price/mix

FX

Other

Sales - Continuing Operations

7,722

7,051

10%

3%

-2%

8%

1%

Nutrition

4,963

4,335

14%

6%

0%

7%

1%

Performance Materials

2,528

2,460

3%

0%

-4%

7%

Innovation Center

155

154

1%

-11%

0%

12%

Corporate Activities

76

102

Discontinued operations

1,213

2,232

in € million

Q4 2015

Q4 2014

% change

FY 2015

FY 2014

%change

Sales - Continuing Operations

1,926

1,811

6%

7,722

7,051

10%

Nutrition

1,264

1,124

12%

4,963

4,335

14%

Performance Materials

601

618

-3%

2,528

2,460

3%

Innovation Center

40

42

-5%

155

154

1%

Corporate Activities

21

27

76

102

Discontinued Operations

0

563

1,213

2,232

EBITDA - Continuing Operations

261

254

3%

1,075

1,038

4%

Nutrition

206

200

3%

822

850

-3%

Performance Materials

90

80

13%

384

323

19%

Innovation Center

-1

-3

-9

-18

Corporate Activities

-34

-23

-122

-117

Discontinued Operations

1

34

95

128

EBITDA margin - Continuing Operations

13.6%

14.0%

13.9%

14.7%

EBIT - Continuing Operations

115

128

-10%

573

587

-2%

Capital Employed - Continuing Operations

7,553

7,431

ROCE - Continuing Operations(%)1

7.6%

8.2%

Profit for the period, before exceptional items - Cont. Ops.

96

97

-1%

381

409

-7%

Profit for the period, after exceptional items - Total DSM

23

-107

88

145

-39%

Net EPS before exceptional items - Cont. Ops.

0.53

0.56

-5%

2.14

2.34

-9%

Net EPS after exceptional items - Total DSM

0.12

-0.63

0.45

0.78

-42%

Cash Flow - Continuing Operations

313

276

800

663

Capital Expenditures - Continuing Operations2

147

182

468

451

Net debt3

2,321

2,420

1) ROCE calculated based on weighted average capital employed
2) Cash, net of customer funding
3) Before reclassification to held for sale

In this report:
‘Organic sales growth’ is the total impact of volume and price/mix;
‘Discontinued operations’ comprises net sales and operating profit (before depreciation and amortization) of DSM Pharmaceutical Products up to and including 10 March 2014 as well as DSM Fibre Intermediates and DSM Composite Resins up to and including 31 July 2015;‘Total Working Capital’ refers to the total of ‘Operating Working Capital’ and ‘non-Operating Working Capital’.

Strategy 2018: Driving profitable growth

On 4 November 2015, DSM presented its Strategy 2018: Driving Profitable Growth, recognizing that, following a period of important transformation, the company will focus on ensuring that the potential of the current business portfolio translates into improved financial results.

To reflect the disciplined focus on performance as well as the dynamic nature of today’s marketplace, DSM has implemented a shorter, three-year, strategic period, with two headline financial targets: high single-digit annual EBITDA growth and high double-digit basis point annual ROCE growth.

DSM is confident that it has the right business strategies in place to meet the needs of its customers and succeed in its markets, providing innovative and sustainable solutions. It intends to accelerate growth and outpace market growth in all its key segments.

In addition to its growth initiatives, DSM is executing cost reduction and efficiency improvement programs with targeted overall savings of €250-300 million by 2018 (of which €25 million was achieved in 2015) and aims to enhance its financial performance through consistent improvements in capital efficiency. Capital expenditure will primarily support growth areas, with approximately two-thirds being focused on the Nutrition cluster.

DSM is adjusting its global organizational and operating model to support the company's growth, creating a more agile, commercially-focused and cost-efficient business. At the same time, DSM is stepping up its sustainability aspirations which serve both as an important business driver in terms of growth opportunities as well as a focus area for reducing operating costs by decreasing the company’s environmental footprint. DSM has successfully embedded sustainability into its business activities, targeting to improve the proportion of Brighter Living Solutions (formerly referred to as ECO+ and People+) to 65% of sales by 2020 and aiming to reduce its (relative) emissions by 45% by 2025, compared to the reference year 2008. Over recent years, DSM has achieved a good balance in its Innovation sales rate (>20%) and in the proportion of sales to emerging economies (~45%). DSM aspires to maintain these levels going forward.

Sales development

Q4 2015 sales were up 12% compared to Q4 2014. Nutrition delivered 7% organic sales growth driven by strong volume growth in both Animal and Human Nutrition & Health. Prices were on average flat as the negative impact of significantly lower vitamin E prices was compensated by higher prices for a range of other nutritional products. As a substantial part of these other products are in-sourced for DSM’s premix activities, these increased prices only have limited benefit at EBITDA level.

Q4 2015 EBITDA was up 3% despite the negative impact of lower vitamin E prices (~€25 million). EBITDA was furthermore impacted by a scheduled maintenance shut-down. Adjusting for this, the EBITDA margin would have been slightly above 17%.

Full year 2015 sales were up 14%. Organic sales growth for the Nutrition cluster was 6%, driven by higher volumes. Sales furthermore benefited from currency effects. Animal nutrition delivered strong growth throughout 2015. Human nutrition started weak but stabilized during the course of the year, showing progress in the second half with a solid fourth quarter.

Full year 2015 EBITDA declined by 3% as good organic growth and the positive impact of the strengthened US dollar were more than offset by the negative impact of significantly lower vitamin E prices, the appreciation of the Swiss franc and the weakening of the Brazilian real.

Animal Nutrition & Health

Sales development

Q4 2015 sales in Animal Nutrition & Health were strong and showed 9% organic growth, driven in particular by the premix business and specialty products. Although growth rates had been anticipated to slow down in Q4 due to tougher comparative figures in 2014, volume growth in fact came in at 7%, supported by positive year-end effects on the timing of orders. On a regional level, Europe and Latin America (including Tortuga in Brazil) performed well, whereas Asia was slightly weaker. Prices showed a 2% improvement as lower vitamin E prices were more than compensated for by higher prices of other materials including in-sourced materials. Currency developments had a negative impact on sales as support from the stronger US dollar was more than offset by weakness in South American currencies, especially the Brazilian real.

Human Nutrition & Health

Sales development

Q4 2015 sales were strong in Human Nutrition & Health, with 5% organic growth achieved against the background of ongoing weak market conditions in the US and Latin America. The strong growth in the quarter was encouraging, although it should be noted that the comparison with the same quarter in 2014 was relatively easy.

Food & beverage markets showed a mixed picture, with ongoing weak conditions in the US and Latin America. Markets in Europe and Asia performed well.

Sales development

Q4 2015 sales were 3% below Q4 2014. Prices were down 7%, reflecting lower input costs. Volumes were marginally down compared to Q4 2015 but there was an improved momentum towards the end of the quarter.

DSM Resins and Functional Materials: Volumes were weak due to ongoing sluggish market conditions. However, during the quarter DSM continued to see transition towards more sustainable waterborne resins especially in China. Prices reflected lower input costs.

DSM Dyneema: Sales were somewhat lower, mainly due to weak demand in commercial marine. Life protection sales performed well.

Q4 2015 EBITDA increased by 13% as result of the efficiency and cost saving programs carried out over recent years as well as good margin management. As expected, the temporary support from lower input costs lessened as these lower prices were passed down the value chain, resulting in a 15% EBITDA margin, somewhat below the two preceding quarters.

Full year 2015 sales were up by 3%. This was driven by a positive 7% currency effect on overall flat volumes. The 4% lower prices reflected the lower input costs.

Full year 2015 EBITDA increased by 19% as a result of the efficiency and cost saving programs that have been successfully implemented over recent years, as well as good margin management. This positive development was further supported by lower input costs and currency developments. The market environment for the UV curable coating resins business in Asia remained difficult which has led to an impairment in relation to DSM’s investment in DSM-AGI.

Innovation center

in € million

Q4 2015

Q4 2014

% change

FY 2015

FY 2014

% change

Sales

40

42

-5%

155

154

1%

EBITDA

-1

-3

-9

-18

EBIT

-14

-9

-43

-45

Capital Employed

560

523

Q4 2015 sales were in line with full year: strong sales development at DSM Advanced Surfaces and positive currency effects were offset by lower volumes at DSM Biomedical as a consequence of weak biomedical device markets driven by the health care reforms in the US.

Q4 2015 EBITDA was in line with full year and showed an improvement driven by more focused innovation activities, cost savings, currencies and license income from bio-succinic acid technology.

Corporate Activities

in € million

Q4 2015

Q4 2014

FY 2015

FY 2014

Sales

21

27

76

102

EBITDA

-34

-23

-122

-117

EBIT

-48

-39

-169

-168

Q4 2015 EBITDA came in lower than the prior year, mainly as a result of costs related to a warehouse fire at the Chemelot site in the Netherlands which were partially covered by DSM’s insurance captive resulting in a loss at Corporate Activities.

Key Joint Ventures and Associates

in € million

Q4 2015

Q4 2014

% change

FY 2015

FY 2014

% change

DSM Sinochem Pharmaceuticals

Sales

86

94

-9%

418

399

5%

EBITDA%

16%

10%

14%

6%

Patheon1

Sales

478

383

25%

1,813

984

n.a.

EBITDA%

24%

22%

21%

18%

ChemicaInvest2

Sales

514

n.a.

n.a.

879

n.a.

n.a.

EBITDA%

-3%

n.a.

0%

n.a.

1) Patheon (formely reported as DPx Holding) respective periods are: for the 4th quarter from 1 August - 31 October, for YTD 2015 from 1 Nov 2014 – 31 October 2015 and for YTD 2014 from 11 March 2014 – 31 October 2014.
2) ChemicaInvest full year figures refer to the period from 1 August – 31 December 2015.

ChemicaInvest (35% DSM) results were impacted by weakness in caprolactam.

Discontinued Operations

in € million

Q4 2015

Q4 2014

FY 2015

FY 2014

Sales

0

563

1,213

2,232

EBITDA

1

34

95

128

EBIT

1

-3

77

30

Discontinued operations comprises net sales and operating profit of DSM Fibre Intermediates and DSM Composite Resins up to and including 31 July 2015. From that date onwards their activities have been transferred to ChemicaInvest.

Financial Overview

Exceptional Items

Exceptional items in the fourth quarter included non-cash impairment charges at DSM Resins and Functional Materials of €26 million related to DSM-AGI (Taiwan) and €15 million related to the site in Stanley (US). A restructuring provision and related impairment charges of €16 million were recognized with respect to the closure of the DSM Biomedical facility in Berkeley (US) to focus its activities in Exton (US). Furthermore restructuring costs and related expenses for cost reduction and efficiency improvement programs amounted to €24 million. Acquisition-related costs were €2 million.

A commercial settlement resulted in a gain of €18 million. Total exceptional items before tax amounted to €65 million and an overall after tax impact of €63 million. Associates reported exceptional items of -€2 million after tax. Discontinued operations comprises net sales and operating profit of DSM Fibre Intermediates and DSM Composite Resins up to and including 31 July 2015. From that date onwards their activities have been transferred to ChemicaInvest.

Financial income and expense amounted to €34 million in Q4 2015 compared to €25 million in Q4 2014 mainly as a result of unfavorable hedge results, higher interest expenses and less interest income due to lower average interest rates.

For the full year, financial income and expense increased by €47 million due to unfavorable hedge results and higher interest expenses.

The effective tax rate in 2015 was 23% compared to 17% in 2014 with a limited cash outflow impact. This increase was due amongst others to a one-time tax settlement for the internal transfer of a business and a somewhat less favorable geographical mix. For the strategy period 2016-2018, DSM expects the effective tax rate to be in the range of 18-20% as presented at the Capital Markets Day.

Total Working Capital amounted to €1,343 million compared to €1,587 million at year-end 2014, which represents 17.4% as a percentage of annualized sales 2015. Total Working Capital at year-end 2015 included cash related liabilities of joint ventures and associates of €137 million. Excluding these liabilities, Total Working Capital as % of annualized sales amounted to 19.2%. Operating Working Capital decreased by €92 million to 23.5% of sales compared to 26.3% at year-end 2014.

Net debt decreased by €99 million compared to the end of 2014 reflecting higher free cash flow from operations, positively impacted by the proceeds from disposals, which was partly offset by unfavorable developments of derivatives.

Additional Information

Today DSM will hold a conference call for media from 08:00 to 08:30 and a conference for investors and analysts from 09:00 to 10:00.